By Phil Shaw, chief executive, Lockheed Martin India.
Budget 2016: The Make in India week in Mumbai was a great success and the support shown by heads of state and companies exhibiting or participating in panel discussions during the event demonstrates the overwhelming appetite to support the Government’s initiative to bring manufacturing to India and supply the world. Prime Minister Modi during his address at the inauguration of the Make in India week encouraged companies to come to India and take the first step towards manufacturing here and he said that the government would take the next two steps with them. In the aerospace and defence sector, during the inauguration of Aero India last year, Prime Minister Modi stated that his government did not want India to be the biggest importer of defence equipment in the world and promised to double the output of defence manufacturing in the country. The upcoming Budget provides the Government an opportunity to look at the defence industry in India and prioritise incentives and the taxation environment for this sector to grow so that the vision can translate into reality.
In order to boost the Indian defence industry and provide a fillip to the vision of ‘Make in India’ some factors which are considered critical will have to be the focus of the Budget. Lockheed Martin supports the Government of India’s goal of indigenising the defence industry via a strategy of creating more opportunities and easing the business environment for local manufacturing, which in turn will reduce dependency on imports.
This will have a two-fold benefit for the exchequer. The outflow of precious foreign exchange will reduce as more and more defence equipment is manufactured in India itself. Secondly, as defence manufacturing increases it will have a positive impact on job creation as well as provide additional tax revenue to the government.
Lockheed Martin is already invested in Indian defence manufacturing. Our joint venture with Tata Advanced Systems in Hyderabad manufactures large aerostructures for the global supply chain of C-130J and the first C-130J with an Indian tail flew in October 2014. Now all C-130Js manufactured have these large Indian built components incorporated for delivery to customers all around the world. In addition the joint venture that Sikorsky has with Tata, also in Hyderabad, is producing thousands of components for the S92 helicopters and is the largest integrated component manufacturing facility in the private sector in the country.
These components go towards the manufacture of the helicopter cabins and Tata Advanced Systems assembles them and ships them to our production line in the United States.
In addition to supporting Make in India with these two joint ventures, they also support the government’s Skills India initiative as they have trained the majority of their own staff through apprenticeships and on the job training. The number employed in both joint ventures has reached almost 1000 personnel. In the C-130J joint venture 600 personnel have been trained, with an additional 400 personnel that are now employed in local aerospace industries.
We welcomed the announcement by the government to increase the FDI cap in defence industries from 26% to 49%. The government has also indicated further relaxation on a case-by-case basis for state-of-the-art technologies. Most companies will consider each investment decision on its own merit though and the business case supporting it will determine the levels of investment that should be made by all partners.
Lockheed Martin has established over 350 active partnerships around the globe. Many of these have been in place for over 4 decades and have migrated from program to program and among a multitude of customers. The common thread of all of these programs has been a shared vision of the future in a global economy and a global industrial base. We hope to be able to do more in India along these lines and look forward to seeing the outcome of this year’s budget to see if there are any incentives for increased engagement.